24/7 Wall St. » SPY

Credit Suisse Trims S&P Target: Another Sell in May and Go Away! (CS, SPY, PPH)

Administrator — Wed, 09 May 2012 12:45:12 +0000

Credit Suisse Group (NYSE: CS) is sort of taking the “Sell in May and go away!” approach. At least that is how it sounds, even if the overall call is still for equities to rise between now and the end of 2012. The macro-call is a reduction in the S&P 500 (AMEX: SPY) year-end target down to 1,450 from 1,470. The report basically notes that the chances of the Greek exit of the Euro is now at 15% rather than 5% probability. On an outright Euro break-up, Credit Suisse now sees a 10% chance of this happening rather than a 5% chance. The global equity strategy call notes that France now faces structural challenges.

Today’s quote is hard to take as positive considering that it says that the S&P could run down to 1,000 into a breakup of the Euro. The crux of the report noted, “Although most risk indicators are neutral (sentiment, risk appetite, insider buying) we think on a 3- to 12-month view equities still have the best risk-reward trade-off among the major asset classes – we stay overweight.”

As far as sectors, Credit Suisse calls on the ‘dollar earners’ and is overweight drugs and the key pharma ETF is Market Vectors Pharmaceutical ETF (AMEX: PPH) but that ETF was not mentioned in the Credit Suisse call.

JON C. OGG

Filed under: Analyst Calls, Economy, Index, International Markets, Research Tagged: CS, PPH, SPY

Apple Overly Dominates S&P 500 Performance, Still Lags Some Index Titans (SPY, AAPL, MSFT, XOM, SHLD, BAC, NFLX)

Administrator — Fri, 30 Mar 2012 13:06:19 +0000

Apple Inc. (NASDAQ: AAPL) has one more bit of evidence that it is acting as if it was its own stock index. Its exceptional share performance is worth a substantial portion of the overall broad market’s gain. While this is certainly not a new incident, the math behind it shows why fund managers who do not hold Apple have almost an impossible time beating their investment benchmarks.

Apple’s dominance is only exacerbated by the notion that its performance is compounded because it is the largest S&P 500 Index (NYSE: SPY) component by far. This almost does not seem possible to say, but Apple is up a whopping 50.5% or so in 2012 while the S&P 500 Index is up about 12%. That shows that Apple’s gain accounts for about 15% of the entire S&P 500 Index gain so far in 2012.

There are reports showing Barclays figures showing that this is the largest single contribution of the entire index from one single stock back to 1991. Barclays also noted that the last double-digit contribution was from Microsoft Corporation (NASDAQ: MSFT) back in 1999. Apple is worth about 40% more in the S&P that Exxon Mobil Corporation (NYSE: XOM).

What is amazing is that the 51% gain is not the top performance from the index and a screen from Finviz.com shows that Apple was only the #10 performer so far this year. Sears Holding Corporation (NASDAQ: SHLD) is up 112% year to date even though it is riddled with problems. The move is followed with the #2 performer as Bank of America Corporation (NYSE: BAC) with a 71% gain so far this year. The #3 spot was taken Netflix, Inc. (NASDAQ: NFLX) with a 66% gain despite its ongoing concerns.

The argument is strengthening that Apple is not just a tech stock nor that it is a consumer products giant. Maybe it really should be considered its own asset class.

If you think this is too dominating over the S&P 500, what if that one call for Apple going to $1,650 per share by the end of 2015?

JON C. OGG

Filed under: 24/7 Wall St. Wire, Consumer Electronics, ETF, Index, Internet, Personal Finance Tagged: AAPL, BAC, MSFT, NFLX, SHLD, SPY, XOM

Surprise… Buffett & Berkshire Hathaway Underperforming Again in 2012 (BRK-A, BRK-B, DIA, SPY)

Administrator — Fri, 16 Mar 2012 12:01:42 +0000

Everyone loves Warren Buffett’s sage advice. Almost everyone at any rate. But what about Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) as an investment. We have argued that perhaps the Berkshire Hathaway empire needs to be evaluated and compared against a mix of stocks and bonds rather than just as a stock. That argument is only more prominent when you consider that Berkshire Hathaway is underperforming the broad stock market all over again in 2012.

If you take a look at the ETF performances of the DJIA and the S&P 500 Index, the SPDR Dow Jones Industrial Average (NYSE: DIA) is now up 9.1% and the SPDR S&P 500 (NYSE: SPY) is up 12.1% so far in 2012. Berkshire Hathaway Inc. (NYSE: BRK-A) is up only by 6.3% on the A-shares and it s up 6.6% on the B-shares which trade at the lower price.

If you peruse through Warren Buffett’s vast investment holdings for the Berkshire empire, it only accounts for the public stocks. There is also the BNSF rail operation, then countless manufacturing and retail operations, and finally the multiple insurance and reinsurance outfits. Buffett recently said he invested in several top European companies, although he did not disclose which ones. He also has two new portfolio managers who are making smart investing decisions so far.

One year is not a lifetime. One recent report on Covestor.com shows how over the last two decades that the return from Buffett has been about twice that of the broad market.

Is something wrong when thinking a return of 6.3% or 6.6% is bad? Perhaps. Still, maybe Mr. Buffett should be working more at his returns and cutting the less profitable areas which might come back rather than trying to preach to his shareholders that they need to be taxed at higher rates. Just a thought.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Buffett, Conglomerates, ETF, Index Tagged: BRK-A, BRK-B, DIA, SPY

Research Stays Bullish On Gold & Silver Over S&P 500 (GLD, SLV, SPY)

Administrator — Fri, 03 Feb 2012 14:23:38 +0000

TrimTabs is out with its newest round of investment research and it is calling for investors to buy gold and silver for the long-term on what it calls a dollar cost average basis. While the move may be different today after the employment data, this is going to be music to the ears of investors who are in SPDR Gold Trust (NYSE: GLD) and iShares Silver Trust (NYSE: SLV) for a multi-year outlook.

Charles Biderman noted, “The U.S., Europe, and Japan are printing enormous sums to pay their bills and in turn are devaluing their paper currencies. I doubt that’s going to change because it’s much easier for central bankers to print money than it is for politicians to cut spending.”

Biderman went on to note that gold and silver prices are going to skyrocket from retail money chasing a limited supply of the metals. On silver he noted, ““The gains in silver could be particularly strong because the silver market is much smaller than the gold market. Silver ETFs have only one-ninth the assets of gold ETFs.”

The current unemployment data from today is signaling that the Fed Funds rate hikes could come toward the end of 2013 now rather than the end of 2014, but that is one-month data.

TrimTabs goes on to note that monetary easing by the Federal Reserve and the European Central Bank has helped push up gold and silver prices much more than stock prices. He even noted that since QE2 was announced, the gold ETF is up 41% versus the 30% gains for the SPDR S&P 500 (NYSE: SPY) gain of 30% after including dividends.

The report even noted that in the past three weeks alone there has been a $1.4 billion inflow into gold ETFs by investors while silver ETFs saw smaller inflows.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Analyst Calls, Commodities, Index, Metals, Trading Alert Tagged: GLD, SLV, SPY

Warren Buffett’s Top Stocks of 2012 (BRK-B, SPY, USG, BAC, IR, MCO, INTC, WFC, AXP)

Administrator — Thu, 02 Feb 2012 13:23:17 +0000

2012 is getting off to a great start for the equity markets. We recently looked at the performance of Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.B), which is underperforming this year so far with a gain of 3.1% to-date in 2012. The S&P 500, or the SPDR S&P 500 (NYSE: SPY) is up 5.5%. We looked through all of Warren Buffett’s stock holdings of late and some of his non-equity holdings to see which positions were leading so far.

The surprise winner so far in 2012 after the first month is USG Corporation (NYSE: USG). then there are stocks like Bank of America Corporation (NYSE: BAC), Ingersoll-Rand plc (NYSE: IR), Moody’s Corporation (NYSE: MCO), Intel Corporation (NASDAQ: INTC), Wells Fargo & Co. (NYSE: WFC), and American Express Co. (NYSE: AXP). Yep, the other winners of these seven holdings are mostly tied to finance.

We have evaluated the performance to date (from FinViz.com) and added in some color on each. We have also shown how the price compares to the 52-week highs or to the consensus price target as well, and included in some cases whether the position is substantial or not.

USG Corporation (NYSE: USG) is up 32.8% year-to-date and is actually Berkshire Hathaway’s top performing stock. With so much interest in the bottoming out of housing at some point in 2012, it may not be that ridiculous even if the fundamentals have not changed all that much yet. The concern here is that at $13.50 it now trades above the consensus $13.30 price target. Buffett holds over 17 million USG shares.

Bank of America Corporation (NYSE: BAC) is up 32.4% year-to-date and the new large preferred position is back to where Warren Buffett doesn’t look foolish for dreaming up his investment in BofA while in the bath. At $7.36 there is still plenty of upside to the $8.90 price target and this remains (and is expected to remain) well under book value.

Ingersoll-Rand plc (NYSE: IR) is up 15.5% year-to-date, not bad for what is usually a slower-moving company with a portfolio of industrial and commercial products. At $35.18, it does not have much upside left to the consensus price target of $37.94 but it is still way off the 52-week high of $52.33. Buffett’s position is way down from prior periods and is only 636,600 shares as of the last report. This position just can’t move the entire Berkshire Hathaway Barometer too much.

Moody’s Corporation (NYSE: MCO) is up 11.6% year-to-date. The credit rating agency has been a controversial position that Buffett has lightened up on through time. At $37.60, it is close to the consensus price target of $39.60 and under the 52-week high of $41.93. Buffett did lighten up a bit on this position but still holds roughly 28.4 million shares.

Intel Corporation (NASDAQ: INTC) is up 9.5% year-to-date and is one of the news 2011 investments that Mr. Buffett hid. It was also his first technology pick as far as pure hardware is concerned. At $26.55, Intel is very close to its 52-week high of $27.00 and close to its consensus analyst price target of $27.17.

Wells Fargo & Co. (NYSE: WFC) is up 8.9% year-to-date and is up the least of the big money-center banks. It is also the only one of the money-center banks trading above book value because the restructuring regulatory climate over future earnings will create the least amount of change at Wells Fargo. Buffett keeps adding here and now holds over 361 million shares as one of his biggest positions ever.

American Express Co. (NYSE: AXP) is up 7.7% year-to-date, which is lower than many financials. The recent earnings report showed improvement but perhaps a trend towards peaking of the improving credit metrics of AmEx customers. Buffett’s position is roughly 151.6 million shares.

Berkshire Hathaway’s most recent holdings in entirety can be found here.

If you enjoyed the top analyst calls, you can sign up in the box below to join our morning email list to receive news directly in your inbox each morning. We include major analyst upgrades and downgrades, IPO and M&A news, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

JON C. OGG

Filed under: Banking, Buffett, Dividend, Index, Value Investing Tagged: AXP, BAC, BRK-B, INTC, IR, MCO, SPY, USG, WFC

ETFs Winning & Losing Fund Flows Into Year-End (GLD, XLV, FXI, SPY, XLK, EFA)

Administrator — Wed, 28 Dec 2011 19:46:47 +0000

TrimTabs is showing what many investors might have expected. After such a volatile year in the stock market, investors are seeking safety in the nearly no-income offered by bond funds and bank savings accounts. The areas suffering: gold, healthcare, and China. What is interesting is that there are some unexpected winners of inflows in equity ETFs as well.

Over $50 billion has flowed into bank savings accounts in the last month, with another $30 billion going into bond funds. Rather than income, “Safety” is currently the most important criteria for investors at this time per the TrimTabs report.

What you guessed on gold is true: Over the past month $2.2 billion left the SPDR Gold Shares (NYSE: GLD) ETF. TrimTabs also pointed out that another $800 million has flowed out of the healthcare ETF called the Health Care Select Sector SPDR (NYSE: XLV). When you consider that the Gold ETF is worth over $70 billion it might not matter so much, but the healthcare ETF has a current value of only about $4.4 billion per Yahoo! Finance data. The iShares FTSE China 25 Index Fund (NYSE: FXI) was also said to lose the same as the healthcare ETF, and its market cap is listed as about $6.3 billion.

While money has continued to flow out of U.S. equity mutual funds, it is a bit interesting that the biggest inflow over the last month was in the SPDR S&P 500 (NYSE: SPY) with a $5.9 billion inflow. Its market cap is about $86 billion as of now. Charles Biderman noted that it was those inflows which “surely supported the S&P 500’s 6% pop in price.”

Another gainer was the $800 million inflows into the tech ETF via the Technology Select Sector SPDR (NYSE: XLK). The market cap today is about $7.45 billion, but it is interesting that investors went into this one just in time for so many technology leaders to issue earnings warnings even though the time measured showed a 3% rise in that one.

iShares MSCI EAFE Index (NYSE: EFA) rose 3.3% in the time tracked and it saw an inflow of about $700 million in new funds versus its market cap of $36.3 billion. This is effectively the international equity large cap index.

Biderman expects that new funds will continue to head into bond funds and savings accounts, but he noted that January is traditionally one of the biggest months for new inflows into equity mutual funds. He said, “As a result of more money chasing less new shares, the S&P 500 usually has gone up not only during January but most of the time right up until tax time in April.”

Read Also: Top Biotechs For 2012

JON C. OGG

Filed under: Bonds, Dividend, Economy, Editor's Picks, ETF, Index, Mutual Funds, Shareholder Issues Tagged: EFA, FXI, GLD, SPY, XLK, XLV

BofA Merrill Lynch Lightens Up On Equities (SPY)

Administrator — Tue, 15 Nov 2011 13:06:06 +0000

In the latest RIC Report, Bank of America Merrill Lynch has come out with a new report titled “Time to Reduce Equities.” There is no hidden message in the report and it is pretty much what it sounds like. The equity allocation is being reduced to 60% from 65% and the wonderful returns of fixed income has been raised to 35% from 30% for U.S. corporate bonds and emerging market bonds.

The bank noted that liquidity and profits which have been powering the markets since March 2009 look less potent in the coming quarters.

The quote sums up the obvious: “we believe this is an appropriate time to make this change given the ongoing deleveraging constraints on global activity, slower earnings growth in 2012 and our more conservative US equity outlook.”

The good news is that BofA noted that while equity upside is constrained, there is still opportunity in assets that provide yield, growth and quality.

As far as the technicals, it is a break above 1,350 on the S&P that would require leadership from the banking sector; while the break below 1,100 on the S&P would signal a new global recession driven by a hard landing in China. We track the S&P via the SPDR S&P 500 (NYSE: SPY).

BofA is issuing from the U.S. Equity and Quantitative Strategist a 2012 year-end target of 1,350 for the S&P 500 with the best sectors being staples and technology. So, with a 1,241 close on Monday’s S&P, BofA’s upside target for 2012 only about 8.8%.

JON C. OGG

Filed under: Analyst Calls, Economy Tagged: SPY

The Best Performing S&P Stocks of 2011 (SPY, OKE, AN, ROST, LTD, GR, TSO, EQT, ERTS, WFM, RL, TDC, RRC, MA, HUM, CMG, VFC, ISRG, BIIB, EP, COG)

Administrator — Tue, 01 Nov 2011 16:08:23 +0000

October may have been one of the best months of many of our lives in equities. The SPDR S&P 500 (NYSE: SPY) rose by 10.9%. in October, but the year-to-date gain has been a mere 1.2% from the December 31, 2010 close to the close on October 31, 2011. 24/7 Wall St. wanted to see which stocks are up the most in percentage gains so far in 2011 in data provided by Capital IQ. This is a year-to-date move through the close of October 31, 2011. We have shown the S&P 500 Index gainers in order from lowest to highest. Another representation is how much implied upside there is to the Thomson Reuters consensus analyst price target as well. Those which are trading above their consensus price target have been given a “caution” ahead of the pricing data.

ONEOK Inc. (NYSE: OKE) 37.1% year-to-date; at $76.05 the consensus price target is $76.60.

AutoNation Inc. (NYSE: AN) 38.1% year-to-date; caution: at $38.94 the consensus price target is $31.28.

Ross Stores Inc. (NASDAQ: ROST) 38.7% year-to-date; caution: at $87.73 the consensus price target is $85.00.

Limited Brands, Inc. (NYSE: LTD) 39.0% year-to-date; at $42.71 the consensus price target is $44.71.

Goodrich Corporation (NYSE: GR) 39.2% year-to-date; This is being acquired, so no color.

Tesoro Corporation (NYSE:TSO) 39.9% year-to-date; at $25.94 the consensus price target is $20.31.

EQT Corporation (NYSE:EQT) 41.6% year-to-date; at $63.50 the consensus price target is $72.28.

Electronic Arts Inc. (NASDAQ: ERTS) 42.6% year-to-date; at $23.35 the consensus price target is $25.63. This was previously listed as our top pick for the best video game stock for 2011.

Whole Foods Market, Inc. (NASDAQ: WFM) 42.6% year-to-date; at $72.12 the consensus price target is $74.47.

Ralph Lauren Corporation (NYSE: RL) 43.2% year-to-date; caution: at $158.79 the consensus price target is $150.00.

Teradata Corporation (NYSE: TDC) 44.9% year-to-date; at $59.66 the consensus price target is $60.56.

Range Resources Corporation (NYSE: RRC) 53.0% year-to-date; at $68.84 the consensus price target is $76.50.

Mastercard Incorporated (NYSE: MA) 54.9% year-to-date; at $347.24 the consensus price target is $374.82. It seems odd to see one financial stock here.

Humana Inc. (NYSE: HUM) 55.1% year-to-date; at $84.89 the consensus price target is $88.71. Health insurance has not been as bad of a business as the administration was looking for.

Chipotle Mexican Grill, Inc. (NYSE: CMG) 58.1% year-to-date; caution: at $336.12 the consensus price target is $328.45. The growth continues, but it is at or close to being fully valued.

V.F. Corporation (NYSE: VFC) 60.4% year-to-date; at $138.22 the consensus price target is $144.33.

Intuitive Surgical, Inc. (NASDAQ: ISRG) 68.3% year-to-date; caution: at $433.86 the consensus price target is $419.27. DaVinci sales remain robust as more surgeons are looking for robotic surgery capabilities.

Biogen Idec Inc. (NASDAQ: BIIB) 73.5% year-to-date; caution: at $116.36 the consensus priced target is $115.22. Here is how this compared to the rest of its peers before earnings season.

El Paso Corp. (NYSE: EP) 81.8% year-to-date; being acquired so no color.

Cabot Oil & Gas Corporation (NYSE: COG) 105.3% year-to-date; ; at $77.72 the consensus price target is $91.32.

JON C. OGG

Filed under: HI/LOW, Index, Trading Alert Tagged: AN, BIIB, CMG, COG, EP, EQT, ERTS, GR, HUM, ISRG, LTD, MA, OKE, RL, ROST, RRC, SPY, TDC, TSO, VFC, WFM

The Ten Best S&P Stocks of October (SPY, JNPR, NBR, FFIV, DNR, HAR, JOYG, NOV, VLO, GT, EP)

Administrator — Tue, 01 Nov 2011 14:52:09 +0000

The month of October was a solid month for stocks, one of the best months of our lifetimes. We have two groups today and the first is the stocks which rose the most in the S&P 500 Index from the end of September to the end of October. The moves were more than impressive and the top ten had to rise more than 36% to even be in the screen from Capital IQ.

The SPDR S&P 500 (NYSE: SPY) rose by 10.9%. but the gain from trough to peak was far more. We have offered some color on each and shown how much implied upside is there to the Thomson Reuters consensus analyst price target as well. These gainers are listed lowest to highest on a percentage basis for the month.

Denbury Resources Inc. (NYSE: DNR) rose by 36.5% as shares rose from $11.50 to $15.70. Analysts have a consensus price target of $24.40. The company acquires and develops oil and gas properties in the Gulf Coast states. The company announced a $500 million share buyback during October, but it also announced that its President & COO has left the company.

Valero Energy Corporation (NYSE: VLO) saw a 38.4% gain as the stock rose from $17.78 at the end of September to $24.60 at the end of October. Analysts have a consensus price target of $31.50. Valero was the subject of buyout speculation and its shares have not really sold off after word came that one rumored acquirer was not looking o acquire it.

National Oilwell Varco Inc. (NYSE: NOV) saw a 39.3% rise from $51.22 at the end of September to $71.33 at October’s end. Analysts have a consensus price target of $89.75. If the offshore oil market is going to be opened back up, having a an offshore rig manufacturing business is going to be robust again.

Joy Global, Inc. (NASDAQ: JOYG) saw a gain of 39.8% from $62.38 on September 30 up to $87.20 at the end of October. Analysts have a consensus price target of $102.00.

Juniper Networks, Inc. NYSE: JNPR) rose by 41.8% in October $24.47 versus $17.26. The turnaround in networking is being seen in the stock. Analysts have a consensus price target of $25.03. Juniper has risen off of lows just as many other networking equipment players have seen.

Goodyear Tire & Rubber Co. (NYSE: GT) rolled on and on for a 42.3% gain as shares went from $10.09 at the end of September to $14.36 at the end of October. Analysts have a consensus price target of $18.69. Goodyear is back to profits and shares are actually still very cheap at about 7-times a blended forward P/E for 2011 and 2012 estimates.

El Paso Corp. (NYSE: EP) saw a 43.1% gain for the month but we would not that this is due mostly to the acquisition of the company.

F5 Networks, Inc. (NASDAQ: FFIV) had a very large run as the network equipment player bounced hard off its lows. A move from $71.05 at the end of September to $103.95 was up 46.3%. Analysts have a consensus price target of $106.67.

Nabors Industries Ltd. (NYSE: NBR) was one of the top performers for October as the shares rose from $12.26 to $18.33, generating a 49.5% gain. The $100 million payout for the CEO exit is under criticism, but the oil and gas driller did beat earnings and has reorganized its management structure. Analysts have a consensus price target of $27.33.

Harman International Industries Inc. (NYSE: HAR) saw a rise of 51.5% as the stock rose from $28.53 on a dividend-adjusted basis up to $43.16. Analysts have a consensus price target of $47.25. In late October came word of higher 2012 guidance as well as a buyback of up to $200 million in its stock over the next year.

JON C. OGG

Filed under: HI/LOW, Index, Trading Alert Tagged: DNR, EP, FFIV, GT, HAR, JNPR, JOYG, NBR, NOV, SPY, VLO

IBM Gives Big Mixed Picture: Earnings to Outlook (IBM, DIA, SPY, CVX, MCD)

Administrator — Mon, 17 Oct 2011 21:03:39 +0000

International Business Machines Corporation (NYSE: IBM) has now reported its third quarter earnings report at $3.28 EPS and $26.2 billion in sales. Thomson Reuters was looking for $3.22 EPS and $26.25 billion in sales. You might have expected that this is “good enough” considering the market action from July through October, but investors have to recall that IBM just hit an all-time again last week. Our take is that this could create a large impact in the DJIA via the SPDR Dow Jones Industrial Average (DIA) versus the S&P 500 vis the SPDRs S&P 500 (NYSE: SPY).

IBM has also raised guidance for 2011 to at least $13.35 EPS from at least $13.25 EPS. This is above targets but frankly it is also valuing IBM at a large premium to the bulk of the large technology players today.

Maybe you want to blame services, maybe you want to blame the currency adjustment creating only 3% growth from a year earlier.

Our take: blame the backlog of future services ordered but not yet fulfilled, billed, and counted as revenues. This is perhaps the greatest measure of future revenues over the next 12 to 36 months. In June the figure for backlog was about $144 billion. The September-end figure was down to $137 billion.

Keep in mind that IBM is the single largest weighting of the Dow Jones Industrial Average by a long shot. That price-weighted index from IndexArb.com counts IBM as being more than 12.3% of the entire weighting of the 30 components, which is effectively the same as the next two largest components of Chevron Corporation (NYSE: CVX) and of McDonald’s Corporation (NYSE: MCD).

Why this matters is that a 4% drop can count as close to a 0.5%% implied drop for the DJIA even if every other 29 of the 30 DJIA components were flat. IBM shares closed down 2% at $186.59 today, and the stock is down almost 4% in the after-hours session and under $180.00 versus a 52-week range of $136.70 to $190.53.

JON C. OGG

Filed under: Earnings, Index, Technology Companies Tagged: CVX, DIA, IBM, MCD, SPY